Wednesday, May 11, 2011

Victory Lap

Courtesy of E.J. Dionne:

Don’t expect to see a lot of newspapers and Web sites with this headline: “Big Government Bailout Worked.” But it would be entirely accurate.

The actual headlines make the point. “Demand for fuel-efficient cars helps GM to $3.2 billion profit,” declared The Post. “GM Reports Earnings Tripled in First Quarter, as Revenue Jumped 15%,” reported the New York Times.

Far too little attention has been paid to the success of the government’s rescue of the Detroit-based auto companies, and almost no attention has been paid to how completely and utterly wrong bailout opponents were when they insisted it was doomed to failure.

Remind us again... who was it that opposed the bailouts? We'll come back to that...

The Detroit Free Press, yesterday:

grvolt0758General Motors plans to kick off a hiring blitz today that will add or preserve about 4,200 jobs in eight states, including up to 2,000 in metro Detroit, people familiar with the planning said.


In Detroit, GM plans to add a bulk of the new jobs at its Chevrolet Volt factory, which straddles a border with Hamtramck. Interest in the Volt extended-range electric car and the arrival of $4-a-gallon gasoline have prompted GM to move up the planned hire date for new workers at the plant, likely to late summer. GM had planned to double the number of workers, which currently numbers about 1,000. Now, it may add as many as 2,000.

GM also plans to expand its work force at the Warren Tech Center and a variety of U.S.powertrain plants. The new hires will include a couple hundred white-collar workers. GM will add many of the jobs in 2012, with some hiring to start this year.

Rick Haglund:

Take that, all you naysayers who predicted the Volt would flop!

It gets even better.

“There is no greater evidence of the positive effect of the historic federal intervention than large new investments in major U.S. automotive facilities on the part of the rescued firms such as General Motors,” said Sean McAlinden, executive vice president of research and chief economist at the Center for Automotive Research.


CAR estimates that this investment over the next year will in total support more than 28,000 jobs in the U.S. economy, including 4,083 people directly employed by GM; 8,638 indirect jobs, such as goods and service suppliers and their suppliers, and 15,492 consumer expenditure-induced jobs, which result from the direct and indirect employees spending their earnings.

The 28,213 jobs earn a total of $1.65 billion in salary, contribute almost $2.9 billion to GDP, pay $169 million in income tax, and contribute $362 million in transfer payments, such as Social Security, Medicaid, Unemployment, and others.

And back to Dionne again:

It’s axiomatic that government isn’t perfect and that we’re better off having a large private sector. It ought to be axiomatic that the private market isn’t perfect, either, and that we need government to step in when the market fails. The success of the auto bailout and the failure of the Republicans’ anti-Medicare campaign both teach the same lesson: The era of anti-government extremism is ending.

The auto makers have learned their lesson. Have we?

Moral of the story: Don't listen to the Republicans. It's much better to create than it is to destroy.